ROSE BELLE SUGAR ESTATE – BOARD OF DIRECTORS – FINANCIAL SITUATION (4.11 p.m.) The Minister of Agro-Industry, Food Security, Blue Economy and Fisheries (Dr. A. Boolell): Thank you very much, Mr Deputy Speaker, Sir. With your permission, I wish to make a Statement with regard to the Rose Belle Sugar Estate. Rose Belle Sugar Estate (RBSE) was set up in 1973 through an Act of Parliament following the acquisition of the estate from Garthwaite & Ors for the sum of Rs18 million. This institution has, since, been actively present in numerous sectors of the economy, namely sugar, food crops, livestock and energy production. Rose Belle Sugar Estate is today in a situation of financial distress with all the leading indicators in the red. The last 10 years has seen Rose Belle Sugar Estate evolve from an Estate with more than 6,100 arpents under cultivation to approximately 1,200 Arpents in 2024. Other auxiliary clusters such as crops and livestock have become extinct. The revenue stream, inclusive of cash flow, have grown into highly negative pools and thus, creating indebtedness. The last decade has seen a palette of mismanagement, fraudulent practices including defrauding of public funds. The Rose Belle Sugar Estate Board has failed in its fiduciary duty to safeguard, preserve and grow the assets of the company. Illegal and suspicious transactions are present in almost all segments of the business with low accountability. The Estate is currently generating more than Rs70 million of annual loss with an accumulated debt level estimated at Rs1.2 billion. The operating cash flow is consistently negative and unsustainable when it comes to servicing its operating expenses which stand at approximately Rs177 million annually. Revenue streams have been on a downward trend with various inconsistencies and unjustified expenses. Rose Belle Sugar Estate is in a dire financial posture and is today insolvent following a decade of fraudulent mismanagement coupled with irresponsible ventures and projects. The attributes of this overwhelming state of affairs can be summarised as follows – (i) Sugar cultivation in 2014 was in excess of 4,500 arpents whilst in 2024, this extent was reduced to 1,200 arpents. The rest of the land bank is today abandoned and generates only Rs25 million compared to more than Rs100 million in 2014; (ii) Meanwhile, expenses have suspiciously increased from Rs44 million in 2014 to more than Rs180 million in 2024. This is mostly attributable to increasing staff costs and bonuses at a time when operations and revenue were decreasing at an increasing rate. Staff costs today make up more than 80% of income generated. This is against good management practices and should have been flagged by auditors; (iii) Other expenses include, inter alia, supplies and services, fertilisers and herbicides where, after a thorough audit, it appears that Rose Belle Sugar Estate had been purchasing supplies for 3,000 arpents when they were cultivating only 1,200 arpents, illustrating clear defrauding of Rose Belle Sugar Estate funds and mismanagement; (iv) Since 2018, there has been no proper accounts prepared in line with international financial reporting standards. This illustrates a clear breach of fiduciary duties from the previous Board of Directors and failure under the Financial Reporting Act 2004 and Company’s Act 2001 respectively; (v) The insolvency of the Estate should have been flagged a while ago as the current assets of the company clearly underscore its current liabilities, that is, Rs169 million assets versus Rs550 million of liabilities in 2024. Overdrafts have been employed to service current liabilities and topped Rs1.2 billion in 2022. Assets have therefore been sold to avoid bankruptcy; (vi) Disposal of assets, inter alia, land and other equipment, have been made without proper frameworks or feasibility matrices. No benchmarks or evaluation have been employed to dispose land under various projects such as morcellements or joint ventures which crystalised huge losses to the Estate. For instance, one ‘toise’ of land at Rose-Belle has been sold in 2023 at Rs13,000 whilst the benchmark of the regional cadastre stands at Rs25,000 to Rs30,000 per toise. This represents an opportunity cost of around 70% of the normal revenue curve. This again demonstrates deliberate defrauding of the funds of Rose Belle Sugar Estate; (vii) Related party transactions, that is, directors and other parties have acquired various assets, directly or indirectly through land reservations. This is against good governance; (viii) Commercial land leases have been conducted at an understated rate, approximately 80% discount to the market benchmark, and is today full of accumulated arrears. This represents around Rs97 million of undermined income. No legal action has been initiated against the usual suspects. Suspicions of officers of Rose Belle Sugar Estate and tenants acting in concert are factual. Tenants such as ‘Vieux Moulin’ and ‘Plaisance Mall’ are in arrears by more than Rs15 million without any action; (ix) Sale of more than 1,000 arpents, under morcellement and other projects, have been conducted fraudulently; (x) Salary increases have been effected without clear rationales and framework; (xi) Rose Belle Sugar Estate has been operating without professional human capital but rather with irresponsible and ill-minded management and Board of Directors; (xii) Debtors add up to around Rs75 million with an average age of 4 years whilst creditors amount to the tune of Rs15 million; (xiii) Rose Belle Sugar Estate has lately engaged itself in numerous ventures with Gibraltar Group, which is loss-making and has vested land to the latter at under- par rates, to the detriment of the Estate. They have even sold their head office – land and building – to the same company at negligible prices. These ventures, together with relevant malpractices, have put Rose Belle Sugar Estate in a minority position and eventually without any control of its prime land. An investigation is warranted here; (xiv) The debts accumulated over the past 10 years are very likely to be classified as non-performing loans by State Bank Mauritius Ltd, given the irregular service path. Their liabilities are close to being classified as stage 3 defaults, implying imminent seizure proceedings. Again, we are exposed to an irresponsible Board of Directors; (xv) This same Board of Directors did not produce and validate any accounts for Rose Belle Sugar Estate for at least seven years. This shows bad faith and non- accountability to its shareholders, that is, government mainly; (xvi) Asset Management practices, including but not limited to land, have been conducted without clear mandates, benchmarks, ring-fencing and targets. This has facilitated corruption and destruction of value purposely, and (xvii) The morcellement project, Lotissement Rose Belle 60 Arpents, clearly shows highly overstated costs of Rs350 m. versus Rs600 m. of expected income. This is also a succinct indication of costs majoration without adequate tender processes. The cost to income stands at more than 50%, totally out of normal morcellement infrastructure rates and other costs. This is highly suspicious, and again, welcomes an investigation. Mr Deputy Speaker, Sir, the above state of affairs demonstrates that Rose Belle Sugar Estate is on the verge of an economic collapse, infested with mismanagement practices, fraudulent acts and ill-mindedness that led to defrauding of funds. The asset value of Rose Belle Sugar Estate has fallen by more than 70% in the last 10 years and sets doubts on the long-term sustainability of the going-concern. A proper forensic audit together with accounts preparation is warranted. I propose to refer the forensic audit to the Financial Crimes Commission. Mr Deputy Speaker, Sir, in view of the scarcity of land available to Government, Rose Belle Sugar Estate is poised to be an important factor in the Ministry’s food security stratagem. The latter shall hence be called upon to embark on a replantation scheme to boost cane production, energy generation and the cultivation of food crops. The Ministry is working on a turnaround strategic mandate 2025-2029 to ensure sustainability, efficiency and accountability. A paper will be tabled by the end of May 2025. Thank you very much.

Thank you. Hon. Members, Madam Speaker will take the Chair. At this stage, Madam Speaker took the Chair.

Please be seated!